Visa has begun rolling out tokenisation across Australia to enable its existing clients, including banks and merchants, to accept and use tokens.
Tokenisation is a process by which a cardholder's credit card number is replaced by a unique 16-digit series number, known as a token. The token can then be used by cardholders to make payments without exposing sensitive account information, such as the card number and expiry date.
Each token is unique to each payment environment, which means every time a cardholder wants to use their credit card digitally, it will be swapped for a token. For example, a token used to make mobile payments will differ from a token stored by particular merchants.
According to George Lawson, Visa Australia head of emerging products and innovation, tokenisation offers an extra level of protection for digital payments because if a token were ever compromised, it could be turned off to save cardholders from replacing their card.
"What tokenisation is enabling is a new layer of security to support all forms of digital payments, not just mobile, but online -- but if you've got your card stored with the merchants, it will also protect that," he said.
He added that tokens will potentially lead to a reduction in mobile and online commerce fraud.
"It's less attractive to fraudsters, because if they actually take the token, or if for some reason that's compromised, then it can't be used anywhere else. What we believe that means is that a fraudster would say there's less interest in going after a database of cards that have been tokenised, because they can't really do much else with it. So, if I have a token on the phone, for example, it can only be used on that phone.
"What that means is I actually can lock it down by use case. This means if I have it in an online environment, and someone tries to use it in a store, then we'll know straight away that token was meant to be used online and someone is trying to use it in-store, and we'll stop that transaction."
Potentially, the rollout of Visa's token technology may also mean that Apple Pay will arrive sooner to Australia. Apple Pay is only currently available in the US, but said it is "working hard" with major merchants, including Visa, to bring the Apple Pay system, which is featured in the iPhone 6 and iPhone 6 Plus, to other countries.
Off the back of the launch of tokenisation, Visa has revealed that as part of a new study by UMR Strategic, the greatest barrier preventing 46 percent of Australians who own a smartphone from shopping online is payment security, and that they don't trust a merchant with their card details.